"What is crowdfunding?
Crowdfunding works by many people (the crowd) putting in small amounts of money to raise funds for a company or project.
When you put money into an equity crowdfunding project, you're buying shares. Typically this will be in small or start-up businesses, meaning you become a part owner of the business.
Crowdfunding is also often used to describe donation or rewards-based fundraising. In those cases, supporters receive rewards (for example tickets to a show or a credit on a film or website) or simply make donations to individuals in need or charities. This type of fundraising is legal but is not covered by financial market laws.
Equity crowdfunding is usually done on websites run by crowdfunding service providers. Each service will work in a different way, but typically you'll be able to browse the website to see potential companies to invest in. You'll be able to read information to help you work out which companies you'd like to support. Then the service will tell you how you can purchase shares. For example, the service may hold your money until the fundraising goal has been reached. Then they’ll pass it on to the company who issues you with the shares you now own.
Companies seeking money have to follow certain rules, such as being honest about the information they provide and how they will use the money. The most a company can seek to raise from equity crowdfunding is $2 million in a 12 month period."Sourcehttps://www.fma.govt.nz/investors/ways-to-invest/crowdfunding/
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